Are You In on the Start-Up Jargon?

11.11.2015

If you read last week’s blog post, you know that we’re currently focusing on entrepreneurship. We do this in the hopes that we’re able to pass on some of our knowledge and experience within the field. After all, just three years ago the founders of Smartplan were in the exact same situation as every other start-up. Next week, you can read about the experiences of the founders Peter, Mathias and Mikkel. While we wait for that, this week’s blog post describes the terms’used in the world of start-ups, the so called start-up jargon:

Unicorn

As you may think, it’s a term used to describe something special and rare. It describes start-ups whose valuation has exceeded $1 billion dollars. Examples of these are Uber, Spotify and Pinterest.

Bootstrapping

This is a description of companies built on personal finances or from operating venues of the company. This means that no third party is investing in the company. This insures the founders 100% control over the company. Mostly, this is considered a good thing, all though you have to consider the possibility that you might miss out on potential development, that a big investment could have given you.

Angel Investor

An investor who invests in the company with the goal of seeing the company and the people behind it succeed. Contrary to the typical investor, the goal is not to make money on the investment. The pleasure of seeing the success of the company is enough. An angel investor is typically family and friends.

Venture Capitalist

This is an investor whose goals are opposite of the ones of the angel investor. The venture capitalist invests to make money. As a result, the venture capitalist often has an opinion as to how the company is run and you must therefore think about how much control you’re willing to give up, before entering a collaboration with a venture capitalist. It can be a great opportunity for a start-up, as the venture capitalist often has a great network and know-how that is useful for a new company.

Seed Capital

The initial capital that is used to found and build a company. The capital usually stems from the founders and their family and friends.

Read the blog next week to get the last part of our entrepreneurship theme: the Smartplan founders’ personal experiences starting up a company.